This is a tough market to navigate. The Iran situation has thrown everything into flux. It could go on for a while or end shortly. Nobody knows.
But it will end sooner or later. A year ago, the tariff hysteria drove the S&P 500 down about 20%, a far more severe selloff than this one so far. But the panic waned, and the market took off. Despite the current barrage of negative headlines, an opportunity is emerging beneath the surface.
Technology stocks continue to struggle. The sector, which had driven this bull market higher for the first three years, has hit a wall as investors grow skeptical about the artificial intelligence trade. So far, the AI rally has been concentrated in companies that provide the technology itself. Investors have grown impatient to see all this investment manifest itself in real-world profits and are looking for the next AI trade.
Artificial intelligence is transforming the world, just not yet.
It may not be changing your everyday life yet, but those changes are coming. It will just take a little while. Transformative changes always show up in stocks before they impact everyday life. Internet stocks soared long before the Internet changed the world around us. But those life-altering changes were on the way.
Similar scenarios have played out this way forever. Railroad stocks were the hottest thing ever in the latter part of the nineteenth century. Those stocks ruled the market long before railroads transformed the country. Later, electricity lit up the stock market. The advent of the incandescent light bulb introduced the world to the exciting new technology.
Eventually, railroads and electricity spawned new industries. Investor excitement moved beyond the railroad and electric companies themselves into these new industries. But it took a while. In the meantime, the soaring profits moved to intermediate beneficiaries.
Ultimately, AI will create new industries that deliver on that change in daily life. And it won’t take nearly as long to happen as it did with past technologies. But there are companies, outside the actual technology generators themselves, that benefit after the initial launch of a technology and before new industries develop.
For example, the railroad craze spread to industries involved with iron (and later steel), lumber, and real estate before oil and retail. Electricity generated booms for copper and rubber for wires and glass for bulbs before actual users of the technology came into focus. This interim phase is likely where AI profits and excitement are moving.
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The AI catalyst is still alive and well and likely still in the early stages. It’s just transforming. Here are two stocks to benefit.
2 Stocks for the Next AI Trade
NextEra Energy, Inc. (NEE)
Yield: 2.7%
AI is transforming the utility sector as demand for electricity skyrockets to accommodate the massive needs of AI data centers. Rising demand is making electric utilities growth businesses as well. The changing environment is adding another hugely positive dimension to these underrated stocks.
NextEra Energy (NEE) is the nation’s largest producer of renewable energy and the largest utility in the country. It should be in an ideal position to benefit going forward.
NEE has historically been a superstar performer for a utility. But it has stumbled in recent years as inflation and rising interest rates made utilities an out-of-favor sector. But things are changing. NEE has been trending sharply higher and has a year-to-date 15% return.
NEE isn’t just some boring, stodgy utility stock with the possible benefit of good timing. It has a long track record of not only vastly outperforming the utility sector, but the overall market as well. Prior to 2023, NEE total returns more than doubled those of the S&P 500 in the prior five- and ten-year periods.
NEE is two companies in one. It owns Florida Power and Light Company, which is one of the very best regulated utilities in the country, accounting for about 55% of revenues. It also owns NextEra Energy Resources, the world’s largest generator of renewable energy from wind and solar. It accounts for about 45% of earnings and provides a higher level of growth.
NextEra is the best of both worlds: defense and growth. There is also a huge runway for growth projects. NextEra has deployed over $50 billion in the last few years for growth expansions and acquisitions. It also has a large project backlog.
As the country’s largest producer of clean energy, NextEra has a huge advantage going forward. The skyrocketing growth in electricity demand is primarily driven by data centers and AI. Technology companies are highly carbon-conscious and will opt for clean energy alternatives whenever possible to reduce their carbon footprint.
The stock price has pulled back a bit from the 52-week high. It is likely consolidating at the higher range. The regulated and alternative energy utility has been red hot. It broke through the old resistance around 75 per share in the fall, then stalled for a few months, and then soared to new territory.
After struggling amidst inflation and rising rates a few years ago, the utility has a goal of 8% annual earnings growth through 2032 and 10% annual dividend growth through 2026. The bigger news is that it signed two large renewable and storage deals with Alphabet (GOOG) and Meta (META) as future business continues to grow to accommodate data centers. NextEra is also enhancing its infrastructure to meet growing data center demand and has partnered with Xcel Energy (XEL) to jointly speed up energy resources for data centers.
Iron Mountain Incorporated (IRM)
Yield: 3.2%
Iron Mountain is an information management service provider operating as a Real Estate Investment Trust (REIT). It’s a global data powerhouse with $6.9 billion in annual revenue that serves over 240,000 customers in 61 countries. The company has a total storage volume of more than 740 million square feet of space.
It was founded in 1951 as Iron Mountain Atomic Storage Corporation. The original location was a depleted iron ore mine in Livingston, New York. It was used to provide a secure location for corporate records that could survive a nuclear blast.
Beyond the paranoia of the era, securing paper records turned out to be a practical business in high demand. Companies create massive paper trails over time of sensitive information that needs to be managed. Over the decades, through aggressive acquisitions and organic growth, the company grew large enough to go public and had its initial public offering on the NYSE in 1996.
Iron Mountain continued to make acquisitions and became established as an industry leader. In 2013, as the digital age blossomed, a data center division was established, and it became classified as a REIT in 2014. The company has since acquired data centers and boosted capacity in key markets.
Information management is big business these days. Iron Mountain’s customers include 95% of Fortune 1000 companies. The company estimates that the total addressable market for storage in information management is $170 billion, of which they currently have only $6.9 billion, and Iron Mountain is one of the biggest players.
Iron Mountain essentially operates in three segments: Records Management and Digital Solutions (DMI), Data Centers, and Asset Lifecycle Management (ALM). DMI is the original part of the business and still the biggest, accounting for 72% of revenue in 2025. But the exciting growth part of the business is in Data Centers and ALM.
While overall company revenues grew 12% in 2025, Data Center revenue increased 30% and ALM revenue grew 63% from the prior year. The two segments, which the company reports as just the Data Center segment, only account for 28% of companywide revenue but were responsible for two-thirds of the revenue growth in 2025.
The data center segment has grown revenue by a compound annual growth rate of 25% since 2021. The segment currently operates 31 data centers, but it can nearly triple capacity from the current 488 MW to 1.3 GW in the next few years. The company expects to nearly double its current capacity by adding 400 MW in just the next 24 months. According to management, there is sufficient backlog in orders to support over 25% revenue growth in 2026.
The current ALM market is estimated to be $35 billion per year with significant long-term growth potential. The market is also highly fragmented. Iron Mountain is a huge global player that currently has just $633 million in annual revenue. The Data Center segment is expected to account for 40% of overall company revenue by 2028, up from 28% in 2025.
Although IRM is a REIT, which are mostly known as stodgy income stocks, it has vastly outperformed the S&P 500 in just about every measurable period over the past five years, with a three-year total return of 120% and a five-year return of 281%. Despite those returns, IRM is estimated to be trading more than 32% below fair value based on estimated growth.
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